RBC upgraded CHWY to "outperform" from "sector perform"
Chewy Inc (NYSE:CHWY) stock is set to open at one-month highs this morning right on the heels of a bull note from RBC. The analyst upgraded the online pet supply retailer to "outperform" from "sector perform," praising its risk-reward outlook and strong fundamentals. At last check, CHWY is up 10.2% to trade at $32.19.
Since pulling back to recent support at its 80-day moving average, CHWY has enjoyed an impressive climb higher, and appears to be plowing through recent pressure at its year-to-date breakeven, which coincides with the $30 region. What's more, Chewy is looking to notch its third straight weekly win, should this morning's gains hold.
Coming into today, most analysts were already optimistic on CHWY, with eight of the 12 in coverage calling it a "buy" or better. Plus, the consensus 12-month price target of $35.91 is a 22.8% premium to last night's close, and represents a level not touched by the security since it went public back in mid-June.
While short interest has been in decline recently, down 10.5% in the last two reporting periods, the 11.89 million shares sold short still represent a solid 26.5% of the stock's available float. Plus, it would still take nearly a week to cover these pessimistic positions at Chewy's average pace of trading, leaving plenty of time for a short squeeze to put even more wind at the security's back.